The western financial system is antiquated and destructive. Central banks, including the FED should be abolished. Large banks should be allowed to fail. Depositors should be protected by the government though as they are now, up to $250K

The result would be a truly free market based financial system. Smaller banks will pick up the slack and provide loans for small business start-ups and expansion, but overall, the economy will be based less on debt, and will thus be more robust, i.e. more resilient to shocks.

I realize letting the mega banks fail will result in a sharper immediate downturn than bailing them out, but when the recovery comes, it will be a lasting recovery. Bailing big banks out just props things up a little longer until the mother of all crashes comes. We should go through it now, before the consequences will be even worse.

Why do economists believe in free markets, except when it comes to financial markets? Because, they say, the financial markets are "special". They say that if a large bank fails, there will be contagion. They say we need a lender of last resort (central bank), and so on. This is all group think. They are taught this in school, they all believe it, and so it must be true.

The system will never be changed by those within the system. Sorry, but I think it will take the mother of all crashes before a Ron Paul will be elected and the bankocracy destroyed. I support him, but have little hope for his successful nomination let alone a successful presidential election. Too many powerful forces within both parties will be hard at work to prevent it.

The part I love is how the media wonks seldom fail to mention Ron Paul's rabid support base, but virtually never follow up with any analysis of why that is the case. Or why pretty much no other candidate in recent history (save perhaps, Barack Obama) has achieved anything even close. Ask a Perry supporter what's so motivating about their candidate's ideas, or a Bachmann booster, or someone who is passionately for Obama while you're at it. Our politics are so tragic.

Oh, please share us Americans the off shore pompous opinion! This article is great for propagating two of the great modern contrivances of American politics – those being: the phony “two party paradigm” and the creation of the phony GOP “tea party”. First, the concept of a modern “tea party” came on board with the Ron Paul supporters back in 2007 during the campaign. Actual pounds of tea were to be dropped by a hovering blimp into Boston Harbor on the historic day of the original Boston tea party against British tyranny as a gesture of defiance to the status quo (lost of civil liberties; unending illegal wars; destruction of our currency; torture and extraordinary rendition etc.). Party affiliation, national origin, race etc. wasn’t important – all were welcomed - only a love of liberty and a willingness to fight for it and hence among those veterans the movement is rarely regarded as “tea party” but instead the “liberty” or “freedom” movement and it is definitely not GOP or PERRY or Bachmann!!

No one American mainstream media or lock-step GOP in 2008 endorsed a concept of “tea party” – perish the thought – instead they backed McCain and Palin who got their bloodied grinded behinds handed to them by Obama. This is exactly what the media had orchestrated – and the rank and file GOP voters bought it – they bought media served “stooge of the day” McCain hook line and sinker! Research progressive AP reporter Liz Soldoti’s coverage of McCain 2008 and see how she systematically built him up to become the GOP front runner knowing he was hopeless and would get creamed by Obama! Immediately after the election in an attempt to do damage control the RNC/GOP and right leaning media embraced “tea party” to co-opt the movement for the progressive neo-cons – enter the likes of neo-con personalities such as Rush Limbaugh; Glenn Beck and Sean Hannity. The left media via their controlling component: Keith Obermann; Chris Mathews and Rachel Maddow immediately labeled them racists and nut jobs reinforcing the phony two party paradigm!

Hence: the term “tea party” in the current usage equates to good old American “neo-con”! The concept of “tea party” is a creation of the mainstream media to continue the “two party paradigm” anyone uninformed enough to buy in is being seriously played.
Allow me to go a little TAO on you – the “real” tea party you hear about is not “REAL” the tea party.

Thus, both the right and left American media (both owned by the military industrial complex, GE etc.) played their part in creating the current “tea party” as it was in the interest of both to contain the actual legitimate “liberty movement” (the actual REAL “tea party”) in their desperate attempt to maintain the status quo – that being the phony “two party paradigm”. The illusion of two different parties counter balancing one another - remember recently republican Senator McCain and democrat Senator Kerry arm in arm bellowing for illegal war with Libya? Do you not find it is strange that Obama never changed Bush/Cheney policies regarding: torture; bailouts; WARS; Patriot Act and lost of civil liberties and abuse of American citizenry. Exactly… Americans are spoon fed this controlling device through the lame-stream media – that’s why Bachmann and Perry are being hyped as “tea party” and that is why they are desperately trying to co-opt many of Ron Paul’s life-long political positions on things, such as: auditing the Federal Reserve.

The media is working overtime to convince voters that the candidates like Romney; Bachmann and Perry are significantly different than President Obama – this is pure BS! All the 2012 candidates running in both parties EXCEPT RON PAUL are deep in the pocket of international banking and the military industrial complex! The corrupt system needs to keep bailing out criminals and keep this bogus war on terror going and ramped up bombing and saber rattling keeping American’s placated with the “two party paradigm” allowing for global elites to steal American national wealth and sovereignty! Ron Paul is the only candidate significantly different than Obama and capable of beating him on issues that the majority of Americans heavily support (like ending: illegal wars; torture and illegal detention; abolishing the Patriot Act and Federal Reserve and getting us out of NATO etc.)

So, fellow Americans If you don’t acknowledge that Obama is a corporate puppet you are in serious denial or part of the subversion! If you want things to continue under the rule of the global “banksters’ and “tanksters” – the status quo and the tyranny to grow under the phony “two party paradigm” - vote for: Obama; Romney; Bachmann; Perry etc., but if want things to truly change and have the assurance that you will have the right to be heard and not silenced than begin to restore America liberty now and support Ron Paul! He can’t be bought – and the establishment knows it!

@ Mordan, the best explanation of the great difficulties of adhering to the gold standard that I have found, and in particular relative to its impact on the economies of the four largest economies after WWI, can be found in the book "Lords of Finance".

@ manbearpiggy, Paul's lack of understanding of the Fed, and the amount of sheer misinformation he provides regarding it's activities is, for me, beyond the pale.

I generally agree with his views on foreign wars, and he seem like a genial man. However -

To lobby with so much conviction against the Fed, and with so little understanding of its role is, for me, bordering on irresponsible.

lol do you really think he will be able remove the IRS in 4 years? Is that what you are afraid of? He is not a magician and there is a Congress and Senate you know. The President is not a dictator in the US, hopefully.

he should stop going over and over about the gold standard. It is like an obsession to him and does not do him good in the election. Because he could not implement it in 4 years. Way too difficult. But he could push a balanced budget and push for more transparency at the FED. Good for most market participants.

While as President, Ron Paul could well stop all the wars and repeal the shameful Patriot act Jesus Obama extended against his campaign promise!

Paul Ryan wants the dollar pegged to a basket of precious metals which is no less fringe but he doesn't make it a focus of his campaign.

My biggest problem with Ron Paul is one that almost nobody picks up on. He wants to eliminate the IRS and replace it with nothing. You think Grover Norquist and the Tea Party is crazy for not accepting any new revenue? Ron Paul wants no revenue. Sure, before the IRS we had tariffs, the only other possible source of revenue. But that means Ron Paul opposes free trade. Not just free trade agreements. He must necessarily oppose any form of free trade.

Faedrus,
Other than the gold-standard thingy, what other Paul points do you disagree with? Just curious because you seem to be most vocal about the inadvisability of a Paul nomination, to the point of being almost insulting.
I admit that his gold-standard stand is nonsensical and I wish he didn't go on about that.
What other of his proposals do you disagree with?

I'm not against a central bank. But please acknowledge they have a monopoly thanks the legal tender laws. I'm in favor of competing currencies. Why should I go to jail if I accept only gold coins? Maybe unwise from a business point of view, but that's my problem. not yours or the state's or the central bank's one.

The biggest roadblock for Ron Paul is that we have a 2-party system. He can't do anything about that.
The second biggest roadblock, which he can do something about, is that his campaign is undisciplined. For instance, almost all his policy pronouncements are eminently sensible and would be fathomable to most people. But what gets projected is presumably whacky ideas like the return to the gold standard.
The gold-standard idea is no more or less whacky than a balanced budget amendment proposal adopted by some of the other "viable" candidates.
But the fact that many Paulites, mostly educated young voters, seem too quick to be offended and tend to flood journalists' inboxes is not going to endear them to the media. This is a campaign discipline issue.

Sadly, the news business today in America is closer to show business than journalism. But that is something a well-organized campaign should be able to work with without diluting the message.

Ron Paul's message is powerful. If only his "fan base" could be a little more mature and a little less obnoxious, that message has a greater chance of being heard and absorbed.

Paul has the greatest chance of stealing away the young urban educated crowd who overwhelmingly voted Obama in 08. But he has to keep them on message. He did not in 2008, and that cost him. He seems to be repeating that mistake this time around.

I pretty much agree with the blog. But history is littered with examples where the catalyst does not get the full credit.

Ron deserves credit for sticking with his message when it was wildely unfashionable. I admire him for that. Some of his policys are out in left (or rather right) field IMO, but at least he seems consistent.

OTOH Bachmann scares me (perhaps because she is more photogenic and hence electable). Every time I see her I keep thinking of Palin but with fewer mooses. They certainly seem to share the same dislike of actual facts.

"@Faedrus, look at our spending and national debt since 1971. It's pretty evident it was a mistake coming off the gold standard. It opened up the flood gates for the dismantling of our country."

And -

"If you don't realize this was intentional.. you should dig deeper. There is no way they could not have saw the path this would have taken us down."

A couple things:

First, correlation is not causality.

And second, the last sentence is a conspiracy theory with no evidence provided to back it up.

The Fed is a central bank. All developed economies (and most developing economies) have a central bank, and for good reason.

J.P. Morgan played the role of central banker during the recession of 1907, deciding which banks would and would not be capitalized, and therefore which banks would go bankrupt.

Morgan and other bankers of the time realized that this was not a proper role for a banker with limited capital. They then began the work of developing the Federal Reserve, ultimately with the input of Congress at the time, and the Wilson administration.